Federal Judge Sides with Borgata, Issues Injunction Against Former Execs Now at Ocean

Posted on: September 13, 2020, 02:33h. 

Last updated on: September 13, 2020, 03:25h.

MGM Resorts International’s Borgata scored a victory in a federal courtroom on Thursday. A judge issued temporary injunctions against two of its former executives who took jobs at another Atlantic City casino. They have been accused in a lawsuit by their former employer of poaching customers.

Borgata Ocean lawsuit
Ocean Casino Resort in Atlantic City is accused of poaching two Borgata executives. In a ruling last week, a federal judge ordered those two individuals to not disclose any Borgata trade secrets to their new employer. (Image: Ocean Casino Resort)

US District Judge Gloria Navarro issued the 17-page order in a federal courtroom in Nevada. It prohibits William Callahan and Kelly Ashman Burke, both now working for Ocean Casino Resort, from contacting or soliciting current Borgata clients or divulging any trade secrets of their former employer. It also requires Callahan to turn over the company phone he had during his tenure at Borgata.

Navarro, though, did not bar Callahan or Burke from continuing to work with Ocean, where they joined earlier this summer.

Callahan served as Borgata’s vice president of casino marketing, with Burke as its executive director, the MGM casino stated in its complaint last month. It claimed Ocean began recruiting both in June, and by July 22, they accepted jobs at Ocean. So, too, did at least four other Borgata marketing employees.

Borgata said both Callahan and Burke had contracts that forbid them from competing against their former employer for one year. Two weeks after Ocean issued a press release touting the new hires, Borgata filed its suit against both of them and Ocean. The suit came after Borgata claimed its attempts to settle the case “informally” did not succeed.

Judge Finds Borgata Evidence Compelling

In seeking the temporary injunction, Borgata claimed the casino-issued smartphone Callahan had during his tenure there was a “lifeline to customers” who generate more than $25 million in revenue annually for Atlantic City’s largest casino. The phone includes lists of current Borgata high rollers and his text conversations with them.

Ocean announced in its press release that Callahan would oversee guest experiences from the hotel perspective. But Borgata claims he never had experience in those types of activities, such as managing housekeeping or front desk personnel. In addition, Borgata said Callahan’s departure coincided with Ocean’s relationship marketing executive leaving there.

In issuing the temporary order, Navarro said Borgata brought compelling evidence to its claims.

Plaintiff also provides evidence that the phone bill associated with Callahan’s Plaintiff-issued phone confirms that Callahan contacted several of Plaintiff’s top customers,” Navarro wrote. “The evidence suggests that even if Callahan could perform his job with Ocean without violating his non-competition agreement, he has likely engaged in behavior that violates both his confidentiality and non-competition agreements.”

In addition to Callahan returning the phone to Borgata and both he and Burke not contacting Borgata clients or sharing its trade secrets with Ocean, Navarro’s order calls on the former executives submit to depositions within 10 days of the order.

Navarro also scheduled a hearing for Borgata’s preliminary injunction to take place on Sept. 23. If Borgata succeeds, that order would extend the temporary injunction, potentially to the end of the lawsuit itself.

Defendants Claim Nevada Not Proper Jurisdiction

In its motion to dismiss the case submitted last week, the defendants claim Nevada is not the proper jurisdiction for the case.

“The suit claims three New Jersey residents violated New Jersey law as a result of conduct alleged to have only taken place in New Jersey,” the motion filed last week stated. “The suit seeks remedies related to alleged harm resulting to Borgata in New Jersey.”

Ocean also stated that it’s not a party to Callahan or Burke’s employment agreements with Borgata, and both Callahan and Burke claim the employment agreement concerns should be settled through arbitration instead of a federal court.

Navarro did not address those claims in her injunction.